By Pavlina Tcherneva
Cross posted from Al Jazeera
“There are red lines in the sand that will not be crossed,” Greek Prime Minister Alexis Tsipras said just weeks ago as he began the long negotiations process with creditors.
Some of these lines included no more pension cuts or value-added tax (VAT) increases, and a debt restructuring deal that incorporates renewed economic assistance from Europe. Tsipras has been working to complete the previous government’s austerity commitments, without any guarantee of a meaningful debt reprieve in the future.
Yet on Monday, he crossed his own previous red lines and offered a round of fresh austerity measures worth 7.9 billion euros ($8.9 billion) — the largest to date — which in turn prompted mass protests at home.
Crafted by the Greeks, an agreement seemed close at hand, but was nevertheless rejected by the International Monetary Fund and Greece’s euro partners at the European Commission and European Central Bank. The fiscal tightening that is currently being discussed is on the order of 2 to 3 percent of gross domestic product (GDP), comparable to that at the peak of the crisis in 2010.
Read the rest of the post here.
Pavlina R. Tcherneva
Pondering here from my academic station
Why has never before such a simple observation
Caused more confusion and consternation
Amongst the general population
That the government is the currency-issuing monopolist
Is not a radical idea, nor a hypothesis
It is a simple, nay, elementary fact
That is often so fervently attacked
IT conjures fears of hyperinflation
The dread of every civilized nation
A crippling phobia that stunts our facilities
To rationally think about the economic possibilities
Pundits, economists, and the average bloke
Firmly believe that the U.S. government is broke
And defend this dreadful and deadly mythology
“There Is NO Alternative,” they say, without an apology
Inequality, retirement insecurity, mass unemployment
Environmental blight, pay gap, and other disappointments
Are no longer problems intractable, alarming and eerie
With a brief introduction to Modern Monetary Theory
©March 31, 2015
By Pavlina Tcherneva
The New York Times made waves this week with another piece on inequality, saying that it has not risen since 2007. The article was based on this paper by GWU’s Stephen Rose.
The article also suggests that expansions are not a good way of looking at trends in inequality (as I have done in the past, also covered by the NYT). Instead, one needs to look at the business cycle. It also concludes that, thankfully, because of government tax and transfer policies, inequality has not been “that bad” over the last few years and governments can clearly do something about it.
So what’s wrong with this picture?
By Pavlina Tcherneva
Cross posted from aljazeera.com
Most analysis of the Greek debt crisis ignores an important reality: While Greece may be the villain du jour, every eurozone nation is profoundly short of cash. That’s because of a well-acknowledged, but not fully appreciated, flaw at the heart of eurozone financial architecture that converted a historically unprecedented number of nations from issuers of their own currency to users of a common currency.
Greece is simply the first country to experience the extreme consequences of that loss of monetary sovereignty. With no independent source of funding, no currency of its own, no central bank to guarantee its government liabilities, it has had to ask others for help. And as a condition for securing that help, Greece has until now been forced to consent to radical austerity policies.
NEP’s Pavlina Tcherneva has made a couple of appearances recently discussing President Obama’s State of the Union and tax proposals with an emphasis on inequality.
Appeared 1/21/15 on the Wall Street Journal Live with Sara Murray. You can view here. Discussion topic was an analysis of Obama’s tax plan.
Appeared 1/27/15 with Tim Farley on Morning Briefing, POTUS Politics, Sirius XM (radio). You can listen here.
By Pavlina Tcherneva (revised 10/10/14)
Winship has produced a rambling and insulting retort to a very thorough and thoughtful response to his false critique of my original inequality chart.
Here are my brief replies to his last post.
- Let me say it again. His business cycle chart is incorrect. One cannot make any sense of what is happening to the distribution of income growth over time by the way he reports his periods. To use his own words, it does not “convey history correctly”.
You can be the judge of whose method is better (his or mine) in calculating the business cycles, but even if you use his method, his results are wrong. See herewhere I present two business cycle charts (using both methods). Both methods yield completely different and more depressing trends than in his chart. It is unclear how he’s chosen his periods.
In a very disingenuous way, Winship, passes the hot potato and implicates Saez and Piketty in his own error, arguing that they do the same thing in Table 1 here. This is incorrect. Saez and Piketty’s table shows one whole time period and then several discrete periodsof various recessions and expansions and, unlike Winship, they have identified their expansions and recessions correctly. They do not report the history of all business cycles (go ahead, check).
NEP’s Pavlina Tcherneva appears on The Real News on October 5, 2014. The topic of discussion is the slow recovery and why monetary policy that is directed at finance and not job creation has this effect.
(A response to Forbes’ Scott Winship)
By Pavlina Tcherneva (revised 10/10/14, 10/11/14)
For the last few years, I’ve been studying the recovery and the kind of monetary and fiscal policies that are conventionally used to deal with recessions. One of the questions I considered was not just how we grow, but who benefits. The answer to the first question, I argue, provides insights into the second.
Examining the widely-used Piketty-Saez data, I found that the way we grow in the U.S. brings inequality. Namely, with virtually every postwar expansion, a greater and greater share of the average income growth has gone to the wealthy 10% of families. In the immediate postwar era a declining share of growth went to the bottom 90% of families (a trend not to be ignored), but they still captured the bulk of the growth in average incomes. Since 1980, however, the majority share has gone to the rich, while in the latest expansion they captured 116% of that income growth. This seemingly absurd result is due to the fact that incomes of the bottom 90% of families during the 2009-2012 period have been shrinking.
Pavlina appeared on NPR’s Morning Edition with Scott Horsley this morning, Oct 3. Topic of discussion was economic disconnect. You can listen here.
Pavlina R. Tcherneva presents her proposal for a Youth Employment Safety-net (YES!) at the Interdisciplinary Conference on Youth Unemployment in Times of Crisis “¡No Mas! Strategies and Alternatives”. Middlebury College, VT (starts at 38min 45secs)